Wednesday, November 26, 2014

A product with a free service or a service with a free product

In retail there is a battle for survival. Bricks and mortar stores are having huge problems to deal with the competition from E-commerce.
Most players are rather creative in trying to capture the attention of potential customers.

Last week I did buy a Sonos loudspeaker. These are rather pricey, so I had just put it on my wish list. By coincidence I saw that Sonos now had a special offer. This offer includes a full year free service from a streaming music service called Deezer. The regular price of this service is €9,99 per month and I now have free access for a year. That seems like a great deal for me.
But who will benefit from this deal , is it Sonos or Deezer.? Probably Sonos has to pay a certain amount to Deezer to include this offer. After one year, I can cancel my subscription to Deezer and do a market scan for the right offer, This can be Deezer, but also one of their competitors like Spotify. Then Deezer runs the risk that they will loose me as a customer. For Sonos, it doesn’t matter, as they did sell their product already.

I think a better alternative would have been the other way around. What do I mean? Why didn’t Deezer offer me their music service for maybe €15,- per month in which the use of an up to date Sonos speaker is included? In that way all three parties (customer, Sonos and Deezer) involved will benefit and there is a high likelihood that I would be a loyal customer for a few years.

It looks like an old approach, where services are offered for free. Service providers should be more aware of their position in the market and take the lead, rather than putting themselves in a dependent position form product manufacturers.

Enthusiasm drives Excellence!

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